Market Logic

An exception to the tendency for actuarial methods to outperform clinical methods?

Posted in actuarial vs clinical prediction, statistics by mktlogic on January 7, 2009

On page 103 of “The Death of Economics” Paul Ormerod writes:

“In the same way, the macro-economic models are unable to produce forecasts on their own. The proprietors of the models interfere with their output before it is allowed to see the light of day. These ‘judgmental adjustments’ can be, and often are, extensive. Every model builder and model operator knows about the process of altering the output of a model, but this remains something of a twilight world, and is not well documented in the literature. One of the few academics to take an interest is Mike Artis of Manchester University, a former forecaster himself, and his study carried out for the Bank of England in 1982 showed definitively that the forecasting record of models, without such human intervention, would have been distinctly worse than it has been with the help of the adjustments, a finding which has been confirmed by subsequent studies.”